European Union and the Mercosur bloc, comprising Brazil, Argentina, Paraguay, Uruguay and Bolivia, today signed a trade agreement aimed at creating the world’s largest free trade area, in a move described as historic after negotiations that lasted for more than a quarter of a century.
Despite the expectations surrounding the agreement, the main concern centres on its impact on local markets, particularly the European agricultural sector.
The agreement includes a series of measures to gradually eliminate customs duties on around 90 percent of goods traded between the two sides, a step expected to reduce trade costs and increase market openness.
However, many observers have raised questions about the potential impact on European products that may face competition from lower-priced goods from Mercosur countries, which are not always subject to the same environmental and social standards applied to European products.
One of the key features of the agreement is the gradual removal of tariffs on a wide range of industrial and agricultural goods, opening significant opportunities for European companies to access new markets in South America.
Beyond economic benefits, the agreement also provides for the opening of public procurement markets in Mercosur countries to European companies, particularly in sectors such as infrastructure, energy and water. This has raised concerns about possible effects on local companies in those countries.
With regard to agricultural products, the agreement offers what are described as reasonable safeguards by imposing import quotas on certain goods, including meat, poultry, sugar and rice. These quotas define specific quantities that can be imported at reduced or zero tariffs. This aspect has unsettled many European farmers, who view it as a threat to their food security and competitiveness in domestic markets.
Not all European stakeholders oppose the agreement, however. Many European industrialists and manufacturers have welcomed it as an opportunity to expand markets and boost exports.
The automotive sector, in particular, is seen as one of the main potential beneficiaries, as the removal of tariffs previously imposed on vehicles entering Mercosur markets is expected to enhance the ability of European manufacturers to expand their presence in countries such as Brazil and Argentina, which represent large and dynamic markets.
Environmental considerations were also a major focus during the negotiations. While the agreement includes commitments to sustainable development and environmental protection, including respect for the Paris Climate Agreement and efforts to combat deforestation, some critics argue that these commitments are not legally binding and lack robust enforcement mechanisms.
In particular, concerns have been raised that the agreement could accelerate deforestation in the Amazon region, a sensitive issue for environmental organisations that see the deal as a potential threat to global efforts to combat climate change.
The EU–Mercosur agreement opens new horizons for trade and economic cooperation, but at the same time raises significant questions and challenges related to the protection of local industries, especially in Europe. While some view it as an opportunity to stimulate economic growth and expand markets, others warn that it could come at a high environmental and social cost and limit the ability of European countries to uphold their environmental and social standards.
